Brothers Mike and Tim Hargenrater began operations of their tool and die shop (H & H Tool, Inc.) on January 1, 2019. The annual reporting period ends December 31. The trial balance on January 1, 2020, follows: H & H Tool, Inc. Trial Balance on January 1, 2020 Account Titles Debit Credit Cash 5,000 Accounts receivable 4,000 Supplies 19,000 Land Equipment 86,000 Accumulated depreciation (on equipment) 16,000 Other noncurrent assets (not detailed to simplify) 8,000 Accounts payable Wages payable Interest payable Dividends payable Income taxes payable Long-term notes payable Common stock (8,000 shares, $.50 par value) 4,000 Additional paid-in capital 88,000 Retained earnings 14,000 Depreciation expense Service revenue Supplies expense Wages expense Transactions during 2020 follow: a. Borrowed $20,000 cash on a 5-year, 6 percent note payable, dated March 1, 2020. b. Purchased land for a future building site on March 15, 2020; paid cash, $19,000. c. Earned $279,000 in revenue. Transactions dated August 30, 2020, including $57,000 on credit and the rest in cash. d. Sold 6,000 additional shares of capital stock for cash at $1 market value per share on January 1, 2020. e. Incurred $96,000 in wages expense and $33,000 in miscellaneous expenses for 2020, with $28,000 on credit and the rest paid in cash. f. Collected accounts receivables on November 10, 2020, $32,000. g. Purchased other assets on November 15, 2020, $19,000 cash. h. Purchased supplies on account for future use on December 1, 2020, $31,000. i. Paid accounts payable on December 15, 2020, $29,000. j. Signed a three-year $37,000 service contract on December 17, 2020 to start February 1, 2021. k. Declared cash dividends on December 1, 2020, $29,000, which were paid by December 31. Data for adjusting entries: 1. Supplies counted on December 31, 2020, $22,000. m. Depreciation for the year on the equipment, $18,000. n. Interest accrued on notes payable (to be computed). o. Wages earned by employees since the December 24 payroll but not yet paid, $21,000. p. Income tax expense, $17,000, payable in 2021. Analyze Cash Flow Impact: Type of Effect on Cash Flows Transaction Interest expense 1. Financing Income tax expense 2. Investing Miscellaneous expenses (not detailed to 3. Operating simply) 4. Financing Totals 122,000 122,000 5. Operating 6. Operating Direction and Amount of Effect Inflow; $20,000 increase Outflow; $19,000 decrease Inflow; $222,000 increase Inflow; $6,000 increase Outflow; $101,000 decrease Inflow; $32,000 increase No Transaction General Journal Debit 1 March 01, 2020 Cash $20,000 Long-term Notes Payable 2 March 15, 2020 Land Cash Credit 10 December 17, 2020 No entry required $20,000 11 December 01, 2020 Retained Earnings?Dividends. Dividends payable $29,000 $29,000 $19,000 $19,000 12 December 31. 2020 Dividends payable Cash $29,000 $29,000 3 August 30, 2020 Cash $222,000 Accounts receivable $57,000 Service Revenue $279,000 13 December 31, 2020 Supplies Expense Supplies $28,000 $28,000 4 January 01, 2020 Cash Common Stock Additional paid-in capital $6,000 $3,000 $3,000 14 December 31. 2020 Depreciation Expense Accumulated depreciation- equipment $18,000 $18,000 5 October 15, 2020 Wages expense $96,000 Miscellaneous expenses $33,000 Accounts Payable Cash $28,000 $101,000 15 December 31, 2020 Interest expense Interest Payable $1,000 $1,000 16 December 31, 2020 Wages expense $21,000 Wages payable $21,000 8 November 10, 2020 Cash $32,000 Accounts Receivable $32,000 17 December 31. 2020 Income tax expense $17,000 Income taxes payable $17,000 7 November 15, 2020 Other non-current assets $19,000 Cash $19,000 18 December 31, 2020 Service revenue $279,000 8 December 01, 2020 Supplies $31,000 Accounts payable $31,000 December 15, 9 2020 Accounts Payable $29,000 Cash $29,000 Retained earnings $15,000 Depreciation expense $18,000 Interest Expense $1,000 Supplies Expense $28,000 Wages Expense $117,000 Miscellaneous Expenses $33,000 Income tax expense $17,000 H & H Tool, Inc. Income Statement For the Year Ended December 31, 2020 Operating revenues: Operating expenses: Depreciation Expense Supplies Expense Wages Expense Total operating expenses Other item: Interest Expense Income Tax Expense Miscellaneous Expense Net income Earnings per share Balance, January 1, 2020 Add: Additional stock issuance Add: Net income Less: Dividends declared Balance, December 31, 2020 279000 H & H TOOL, INC. Statement of Stockholders' Equity For the Year Ended December 31, 2020 Common Stock 6000 3000 Additional Paid-in Retained Capital Earnings Total Stockholders' Equity 3000 -$20,000 -$20,000 Current assets: Cash Accounts Receivable Supplies Total current assets Property, plant and equipment: Land Assets H & H TOOL, INC. Balance Sheet At December 31, 2020 Liabilities Current liabilities: Accounts Payable Wages Payable Interest Payable Income Taxes Payable Total current liabilities Long-term Notes Payable Equipment Less: Accumulated depreciation on equipment Net property, plant and equipment Other non-current assets Total assets Total liabilities Stockholders' equity Common Stock Additional Paid-in Capital Retained Earnings Total stockholders' equity Total liabilities and stockholders' equity a. Compute the current ratio for 2020. Current ratio b. Compute the total asset turnover ratio for 2020. Total asset turnover c. Compute the net profit margin ratio for 2020. Net profit margin % H & H Tool, Inc. ADJUSTED Trial Balance (to be used to create the financial statements) December 31, 2020 Account Title Debit Credit Cashi 88,000 Accounts receivable 29,000 Supplies 22,000 Land 19,000 Equipment 86,000 Accumulated depreciation-equipment 34,000 Other assets 27,000 Accounts payable 30,000 Interest payable 1,000 Wages payable 21,000 Income taxes payable 17,000 Long-term notes payable 20,000 Common stock 7,000 Additional paid-in capital 91,000 Retained earnings 15,000 Service revenue 279,000 Depreciation expense 18,000 Interest expense 1,000 Wages expense 117,000 Supplies expense 28,000 Income tax expense 17,000 Miscellaneous expenses 33,000 Total 500,000 500,000